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Take Action Today: Let Congress Know We Can’t Afford to Defund AFI

By Chad Bolt on 10/18/2016 @ 11:00 AM

Tags: Individual Development Accounts

The Assets for Independence (AFI) program is a critical tool for empowering low- and moderate-income families to become self-sufficient and climb the ladder of economic opportunity. With only modest federal investment, tens of thousands of Americans have benefited from AFI programs.

Despite its success, AFI funding is at risk of being completely eliminated by Congress. While the House of Representatives supports maintaining AFI funding at the same level as last year, the Senate has proposed cutting funding entirely. This would stop the continued success of AFI dead in its tracks.

Will you help support low- and moderate-income families that want to climb the opportunity ladder by signing on to our letter of support to key members of Congress?

AFI-funded Individual Development Account (IDA) programs successfully combine financial education with matched savings accounts, empowering low-income families to build assets. IDA participants combine their own savings with matches from private and public funds to purchase a home, capitalize a business, or pay for postsecondary education or training. Since its inception in 1998, participants in AFI programs have deposited over $100 million into their IDAs with only minimal federal investment. Federal funding is stretched further by requiring that all AFI grants be matched by non-federal funding.

AFI has a proven, nationwide impact. Gold-standard randomized control trial research by the Urban Institute shows that AFI participants are more likely to have liquid savings and are less likely to suffer financial hardships or resort to wasteful non-bank financial services. AFI has enabled more than 9,400 Americans to become homeowners, 7,200 new students to pursue postsecondary or technical education and 6,400 entrepreneurs to start or expand a small business. In the last decade, more than 85,000 AFI-funded accounts have been opened in 1,100 sites across the country.

AFI is run by the Administration for Children and Families (ACF) at the Department of Health and Human Services. ACF has prioritized innovation and collaboration while administering AFI, adapting the way it helps local organizations in order to maximize effectiveness and partnering with other agencies like the Consumer Financial Protection Bureau to better integrate financial capability services. We can’t let AFI funding get cut off now.

The Senate has never proposed eliminating AFI funding before. With a strong show of support from organizations across the country, we believe level funding for AFI can still be included in a funding bill Congress will likely pass when it returns after the November elections.

Adding your voice is simple. Support low- and moderate-income families by signing on today!

If you have questions, please contact Chad Bolt, Legislative Analyst, at cbolt@cfed.org.

Structural Challenges Continue to Characterize the State of the IDA Field

By Callie McLean, Graduate Intern on 09/08/2016 @ 10:00 AM

Tags: Individual Development Accounts, Federal Policy

Earlier in the summer, CFED solicited responses to its 2016 Individual Development Account (IDA) Program Survey. The results are in, with many important insights on how we can support and grow the field of practitioners who make it possible for even the most vulnerable families to save. Among the good news, this year’s survey shows that a large majority of IDA programs receive federal funding, and that funding is largely remaining stable or growing. But the survey also reveals deep and pressing needs, such as training on raising the non-federal match funds that are essential to secure federal dollars.

IDAs help low- and moderate-income individuals and families save toward an asset like a home, an education, a car, a small business and more to build financial stability. These matched savings accounts can go a long way to help jump-start greater economic opportunity. CFED takes stock of the field annually to discern trends and impacts across IDA programs nationally. The survey data allow IDA programs to see how they fit in this wide-spanning field and help CFED determine how we can best support IDA providers.

CFED distributed the 2016 survey to the IDA Program Listserv and the Assets & Opportunity Network and received responses from nearly 90 programs nationwide. We offer our gratitude to all who took the time to respond.

The Headlines

  • The funding picture looks more positive than in past years, Funding has remained stable for about half of respondents, while about one in three said their funding increased! Only 16% of respondents reported that their funding decreased. In addition, 80% of respondents reported receiving federal funding, making it the most common funding source (consistent with past years).
  • Financial coaching is becoming widespread at IDA programs. Eighty percent of respondents indicated that financial coaching and education are the top financial capability services that they offer to their IDA program participants. These organizations also offer a large variety of additional services through partnerships or referrals. Similarly, 80% of respondents indicated that they engage participants through ongoing case management and financial coaching. Also notable was the slight uptick in the number of organizations using social media to engage clients (37% in 2016, compared to 23% in 2013).
  • IDA staff are hungry to learn more about raising non-federal matching dollars and measuring impact. Sixty percent of 2016 respondents selected raising non-federal dollars for administration and/or participant match as one of the most important technical assistance topics they’d like to see, 55% selected measuring/evaluating the impact of IDA programs and nearly 50% selected developing effective funding proposals for non-federal funders.

New Legislative Innovations

In addition to understanding the needs of the programs in the field, CFED has also been hard at work incubating innovations in IDAs. Our most recent progress has been with the Refund to Rainy Day Savings Act. In addition to allowing tax filers to set aside and possibly receive a match on their tax refunds if they save a portion of their refund for six months, this legislation, introduced by Senators Cory Booker (D-NJ) and Jerry Moran (R-KS), would also enable grantees of the Assets for Independence (AFI) program to innovate by changing the types of asset purchases available to participants, changing the eligibility requirements or testing out new structures. If you are interested in learning more or signing on to support this legislation, email Ezra Levin, Associate Director of Government Affairs, at elevin@cfed.org.

Want to know more about the results of our survey? Download our PowerPoint presentation with graphs showing responses to questions asked of respondents. Have questions? Feel free to email IDAProgramSurvey@cfed.org.

Action Alert: Tell the Senate Not to Cut Assets for Independence!

By Ezra Levin on 06/14/2016 @ 12:00 PM

Tags: Policy Alerts, Federal Policy, Individual Development Accounts, Matched Savings

IDAs are on the chopping block. Take action now to preserve this critical program!

The Senate Appropriations Committee just moved to zero out funding for the Assets for Independence (AFI) program, which has funded and supported Individual Development Account (IDA) programs nationwide for nearly two decades. Several other programs were also eliminated in the committee’s $160 billion funding bill for education, health and human services and labor programs. The committee vote was nearly unanimous, meaning the bill has wide bipartisan support.

This is a significant development because the committee has never moved to eliminate AFI before. While there are several steps between the committee’s action and the bill becoming law, we need your help to let the Senate know how important AFI is, and to oppose any action that eliminates the program. Please email or call your Senators to make this clear; see instructions below for making your voice heard. Once you have contacted your Senators, please let us know by emailing Ezra Levin, as we will be monitoring developments closely and working to build opposition to this misguided action. When and if the Senate schedules a vote later this year on the bill, we will be reaching out to you again to quickly mobilize opposition to any cuts to AFI.

Take Action

Call your Senators and urge them to protect the Assets for Independence program!

  • Call 202.224.3121 and ask to be connected to your Senator’s office. If you don't know who your Senators are, find out here.
  • Once you're connected, here's what to say:

My name is [your name] from [your organization or coalition], and I’m calling to request that Senator [Senator’s last name] oppose the Fiscal Year 2017 Labor-HHS-Education Appropriations bill (S.3040) because it would eliminate all funding for the Assets for Independence program. Assets for Independence supports innovations in the field and helps low-income workers save their own money and build assets to become self-sufficient. [Add local AFI program details here if applicable]. Since Assets for Independence was enacted nearly 20 years ago, the Senate has never moved to eliminate its funding. Unless funding for Assets for Independence is reinstated, I strongly urge Senator [Senator’s last name] to vote against the appropriations bill when it comes to the Senate floor for a vote. Please let the Senator and the appropriations staffer know that I will be watching this closely and will get in touch again after the vote.

Thank you for everything that you do on behalf of low- and moderate-income Americans everywhere. If you have any questions or need any additional information, please let us know.

This Innovative Matched Savings Model Makes More Students Stay in College

By Stephanie Landry and Amy Shir, Guest Contributor on 04/21/2016 @ 01:00 PM

Tags: Individual Development Accounts, Matched Savings

Assets for Independence (AFI), a federal program administered by the Administration for Children and Families at the US Dept. of Health and Human Services, enables low-income participants to save towards their dream of owning a home, starting a business or attending college. They do this through Individual Development Accounts (IDAs), in which participants save for one of these three assets and ultimately have their savings matched at the point of purchase through a combination of federal grant and non-federal matching funds. While this “dream program” has improved the financial lives of thousands of participants, those who’ve administered AFI projects recognize that there are often challenges to grant implementation, including raising the required non-federal funds to match the AFI grant, finding participants that are able and ready to save and creating a sustainable program.

Luckily, thanks to several fantastic AFI grantees, including Earn to Learn in Arizona, an innovative model has emerged for using IDAs to help students pay for and complete college. This model works by using the college’s scholarship funds to match federal grant dollars; these funds, combined, go to match student savings at a rate of eight to one (resulting in up to $4,000 matched for $500 saved). This approach has been met with astounding success: Earn to Learn alone has enrolled roughly 1,000 student-savers and, most impressively, these students are persisting at rates of over 90%. Additionally, this approach will decrease debt burdens faced by students through narrowing the gap in unmet student need; if a student participates in this model during four years of school, they will have received $16,000 in funds to match their $2,000 of savings.

This model addresses three of the major common challenges faced by AFI grantees:

  • The critical non-federal match requirement can come in the form of already-present scholarship or other financial aid dollars earmarked for low-income students. Colleges love this approach, because they are effectively able to nearly double scholarship dollars when combined with an AFI grant. All of these funds end up being paid to the college through tuition and/or fees.
  • Higher education institutions, both two-year and four-year, have large pools of low-income students that have earned income, such as through work study, and are well-positioned to save. This can help AFI grantees that are struggling to find savers that are ready to participate in an IDA. These grantees should consider partnering with the financial aid offices at their local community colleges and universities.
  • With a pool of savings-ready students, AFI grantees working with colleges can develop sustainable programs. For example, Earn to Learn, applies for a new grant with each partner college every year, the highest frequency allowed by AFI. They are then able to serve the same students through different grants during each year of their students’ attendance. This volume of grants allows them to receive additional administrative funds to support their IDA program delivery.

Stay tuned to learn more about these promising solutions. CFED is developing a case study of Earn to Learn’s AFI project model that will detail how the program was set up, operates and takes advantage of the efficiencies and scale of this sustainable, innovative model.

Amy Shir is an asset-building consultant.

New Bipartisan Bill Boosts Financial Security at Tax Time

By Ezra Levin on 04/13/2016 @ 04:00 PM

Tags: Federal Policy, EITC, Individual Development Accounts, Innovation, Financial Capability, Matched Savings, News

Millions of Americans are poised to get a big opportunity to move their financial lives forward if Congress acts on a bold new policy proposal. We are excited to share the news that Senators Cory Booker (D-NJ) and Jerry Moran (R-KS) have introduced the Refund to Rainy Day Savings Act today!

This bipartisan bill, built on years of research and lessons from the asset-building field, will empower Americans to use the tax-time moment to save for emergencies and foster innovation within the Assets for Independence (AFI) program, the nation’s largest asset-building initiative. Specifically, the bill will:

  • Allow tax filers to set aside a portion of their refund as emergency savings for later in the year. Tax filers receiving a direct deposit tax refund may defer 20% of their refund by opting into the Rainy Day Savings Program on their 1040 tax form. This savings will accumulate interest before being transferred to the tax filer’s account six months after deferral. Tax filers may also opt to withdrawal their funds early, any time after thirty days from filing.
  • Establish a pilot program to evaluate savings matches for lower-income tax filers. This pilot will explore the impact of using matching funds to incentivize the establishment of emergency savings at tax time through the deferral. In this pilot, lower-income tax filers will be able to receive a match ion their 20% deferral at the end of the six-month period. Community organizations, such as those operating VITA sites, will apply for grants to administer this match to their participants and help them build savings and financial capability skills.
  • Amend the Assets for Independence grant program. The bill will greatly expand the flexibility of the program by:

- Establishing “Innovation Development Accounts” that expand allowable matched savings purposes beyond homeownership, small business and education, the only three currently eligible asset purchase.

- Increasing the maximum participant match to $5,000.

- Expanding and simplifying the eligibility requirements for participation.

- Simplifying many program requirements to decrease the burden on both grantees and the AFI program.

The introduction of this bill is a huge step forward for financially vulnerable Americans. Its passage would create a new tool — the Rainy Day Savings Program — to help low-income tax filers save for the inevitable financial emergencies that can occur at any time. With this new savings tool, participants will be less likely to need to reach for a credit card or payday loan when a surprise medical bill or car repair busts the monthly budget. Additionally, the amendments to the AFI program reflect the lessons learned from two decades of Individual Development Account (IDA) implementation and the understanding that practitioners and participants need greater flexibility to maximize the wealth creation potential of the program. Both of these features, with the help of practitioners, will allow Americans to move towards financial security. We urge Congress to take swift action on this legislation to give Americans the opportunity to build a more financially secure future for themselves and their families.

CFED is proud to have worked closely with Senators Booker and Moran on this legislation. This was a very collaborative effort, and we were very pleased to see a large group of leaders weigh in with their own expertise and endorse the final bill. This group includes:

  • Aspen Institute Financial Security Program
  • Asset Building Program, New America
  • Center on Budget and Policy Priorities
  • Center for Global Policy Solutions
  • First Focus Campaign for Children
  • The Housing and Community Development Network of NJ
  • New Jersey Policy Perspective
  • PolicyLink
  • Young Invincibles

An Asset Innovation Fund Could Take IDAs to the Next Level

By Jeannie Chaffin, Guest Contributor on 04/05/2016 @ 10:00 AM

Tags: Individual Development Accounts, Financial Capability, Integrating Financial Capability, Federal Policy

Editor’s Note: April is National Financial Capability Month, and we are running a month-long campaign to raise awareness about the moments in one’s lifecycle when financial capability matters. Today Jeannie Chaffin, Director of the Office of Community Services in the Administration for Children & Families at HHS explores the potential of an Assets Innovation Fund to expand financial capability through the AFI program. This article was originally posted here.

Once again, the President has proclaimed that April is National Financial Capability Month. In recognition of the importance of financial capability to the well-being of low-income individuals and families, the Administration for Children and Families has included in the President’s fiscal year 2017 budget a proposal to create and evaluate an Asset Innovation Fund within the Assets for Independence (AFI) program.

Infographic by former AFI grantee EARN, a non-profit in San Francisco, California.

The AFI program provides support to local demonstration projects to develop knowledge about what practices work to assist families with limited means to use limited-use matched savings accounts called individual development accounts (IDAs) to accumulate assets. Currently, AFI participants can use their IDAs for a first-home purchase, post-secondary education or training, or business capitalization. The proposal to create an Asset Innovation Fund would allow ACF to test and evaluate a wide variety of innovative strategies for asset building and financial capability.

For example, with the flexibility to allow more assets, an Asset Innovation Fund project could offer children’s savings accounts (CSAs) in which parents’ savings and the project match are combined in a 529 college savings plan. CSAs have become a growing area of interest, as cities, states and others recognize the importance of starting early with savings. Research shows that young people with savings are more likely to get better grades and complete more years of education, regardless of their family’s income. One study found that a youth with designated school savings of less than $500 before reaching college age is almost two and a half times more likely to graduate from college than a youth with no savings.

Another emerging area of interest is emergency savings. Kathryn Edin and Luke Shaefer’s recent work $2.00 a Day: Living on Almost Nothing in America describes the critical importance of cash for household budgets. While the authors depict conditions for those in some of the worst conditions in our country, this main finding is relevant for families with even moderate incomes. Tax refunds often help families bridge gaps in their household budgets, or pay off debt. Edin and Shaefer recommend giving families the option to save a portion of their Earned Income Tax Credit, thus giving them access to an emergency fund when they are in a pinch later in the year. Under the Asset Innovation Fund, community-based organizations could create innovative new matched savings programs to encourage emergency savings and other asset building. EARN, a non-profit in San Francisco, California and former AFI grantee, created the EARN Starter Savings Program using private funding. This innovative six-month program allows users to get started saving for the goal of their choice, including emergency savings, and encourages them with small matches. This program and others like it may allow participants the chance to gain more financial stability before working toward a larger asset purchase, such as a first home.

Additionally, ACF proposes to use the Asset Innovation Fund to support projects focused on the integration of financial capability services into existing programs that serve low-income and vulnerable populations. As with CSAs and emergency savings, financial capability integration is an area of recent innovation in the asset building and financial capability field. AFI is well positioned to support innovative pilots that address gaps in the knowledge, such as integrating financial capability services with programs such as the Low Income Home Energy Assistance Program (LIHEAP) and health navigators. Participants in these programs could also be connected to credit and debt counseling or free tax preparation at a nearby Volunteer Income Tax Association (VITA) site, for example. Under the Asset Innovation Fund, ACF could explore and test models of financial capability service integration, both with and without IDAs, to better understand how such services can improve outcomes and wellbeing for the populations we serve.

In the more than 15 years since the AFI program was created, there have been significant advancements in the state of research and knowledge on asset-building and related fields. With the authority to create an Asset Innovation Fund, AFI could build on these developments and push them even further, to better serve low-income children, youth, and adults in the United States and to expand their financial capacity and economic well-being.

Jeannie Chaffin is the Director of the Office of Community Services in the Administration for Children & Families at the U.S. Department of Health & Human Services.

To Boost the Number of College Graduates, Don’t Forget the “Somes”

By Russ Olwell, Guest Contributor and Marquan Jackson, Guest Contributor on 02/22/2016 @ 12:00 PM

Tags: Individual Development Accounts, Education, Data and Research

Policymakers have been focused for some time on the importance of more high school students applying for and attending college. A rise in the number of residents with a college degree is seen as the key for community and economic development, as these individuals have a higher earning power and are less likely to suffer unemployment.

However, there is another population, those students who have graduated high school and started college (either two- or four-year) but left before graduation. Right now, this group represents almost 25% of Michigan’s adult population, according to the American Community Survey (2010-2014). These adults are counted as having “some college,” and their experience has often left them saddled with unpaid bills and student loan debt, but often with nothing to show for their experiences — and without the increased earning power of a college degree.

In our work with an Individual Development Account (IDA) program at Eastern Michigan University with the Ypsilanti Housing Commission, we see many adults in our community who fall into this “some college” category, and their status is an economic drag on their family and, therefore, on the local economy. When we surveyed public housing residents last year, the largest category of debt reported was student loan debt, with over half of the population owing money on loans and many having unpaid college bills in addition.

Addressing the needs of “somes” is a key to improving the economic condition of communities and families. Helping people with some college graduate with a certificate, associate’s degree or bachelor’s increases their earnings power, makes them a role model within their own family — and gives people one less discouraging story about higher education not paying off.

Most importantly, when we work with people in our neighborhoods to complete college, we raise the number of college graduates in the area and help to increase the average income of the neighborhood, but we do so without gentrifying it. We do not always need to recruit young people or out-of-state newcomers to boost the number of college graduates in our community if we work intensively with the people that we have who may be only a few credits short of a college degree.

The Family Empowerment Program has worked on similar issues over the last three years with residents at Hamilton Crossing. To address the needs of “somes,” we have advocated with university collections to make sure participants can restart classes, helped students find scholarships and created an IDA program that matches participants’ savings towards higher education by 8:1. These efforts have given us some victories — students finally able to graduate, pay their bills and move on with their lives — but they have also revealed the extent and depth of the problems these students face.

However, with some effort and resources, more could be done to help “somes” become graduates. These are just a few of the policies that could help:

  1. States can invest in programs that help workers save for college expenses to complete degrees. Individual Development Account programs can help multiply the savings of participants, but partners are needed to provide the matches to enable IDA programs to leverage federal funds.
  2. Colleges and universities can be more proactive and flexible in working to get students back into the classroom. Rather than relying solely on collections as a strategy to recoup lost tuition, a more flexible approach would allow some forgiveness of unpaid tuition bills (particularly late fees) if the student can return to class and complete the degree program. Without a degree, many students have no chance of earning enough to pay off unpaid bills and loans. This strategy is in the colleges’ best interest, as alumni are better to have than debtors.
  3. Community groups and social service agencies can reach out to “somes” to help them complete degrees or find ways to receive credit for the work they have done so far. “Reverse transfer” programs can help students get an associate’s degree for work already completed, but too few people know the options that exist for degree completion.

Higher education is not only good for the graduate — it has benefits for their family and the whole community as well. With each successful college graduate, families and neighborhoods get one more person better able to support her or himself, one more person who serves as a role model and guide to others, and one more example of why completing a college degree is important.

This same message needs to be delivered to adults in our community, particularly parents. Many parents returning to college do so to be a role model for their own children. While we are encouraging all our high school students to think seriously about what they want to do after graduation, we should also encourage many of their parents, uncles, aunts and cousins to finish what they started in college and to finally gain the economic and other benefits of a completed certificate or degree program.

Russell Olwell and Marquan Jackson are part of the Ypsilanti Family Empowerment Program in Ypsilanti Michigan. Their IDA program is a partnership of Eastern Michigan University, the Ypsilanti Housing Commission, the United Way of Washtenaw County, Zingerman’s Community of Businesses, Great Lakes Capital Fund and Chesapeake Community Advisors.

How We Can Reach President Obama's Goal to "Make College Affordable for Every American"

By Dominique Derbigny on 01/14/2016 @ 10:00 PM

Tags: Education, Federal Policy, Individual Development Accounts, Assets & Opportunity Initiative

During President Obama’s final State of the Union Address on Tuesday, he declared that “we have to make college affordable for every American,” and he went on to say that “providing two years of community college at no cost for every responsible student is one of the best ways to do that.”

These comments echo what we at CFED have been talking about for a long time: to get ahead—or even just to get by—in today’s economy, a college degree is increasingly a requirement. At the same time, skyrocketing college costs have put a damper on many students’ dreams of higher education, as many young people are wary of taking on burdensome debt if they don’t have enough savings to pay for school. As a result, only one in 10 low-income students goes on to finish a college degree by their mid-twenties. So how can we help more young people access the education they need to succeed in a twenty-first century economy?

One year ago, President Obama offered a solution when he rolled out the America’s College Promise Proposal, which seeks to increase access to post-secondary education by funding community college for millions of students. Under this legislation, federal funding would cover 75% of tuition expenses, with participating states supplying the remaining 25%. To qualify, students must attend community college at least half-time, maintain a 2.5 GPA and make steady progress toward completing their program.

The America’s College Promise Proposal has the potential to:

  • Benefit an estimated 9 million students.
  • Save full-time community college students an average of $3,800 in tuition per year.
  • Increase the number of students who complete an associate’s degree.
  • Create a pathway to a four-year college or university.
  • Reduce college debt and the student debt divide.
  • Make community college more accessible to non-traditional students.

Despite these promising benefits, the proposal has some critics. Some opponents are concerned that making community college free may dampen enrollment at four-year colleges and universities—particularly historically black colleges and universities (HBCUs), which are increasingly relying on tuition revenue to cover costs.

Fortunately, the Assets for Independence (AFI) program offers a possible solution to this problem. Through the AFI program, low-income students can save money in an Individual Development Account (IDA), a matched savings account for eligible asset purchases, including post-secondary education. Then, by working with community organizations to pair scholarship dollars with federal funding through AFI, colleges can leverage funds to increase affordability and accessibility.

One organization successfully executing such a strategy is Arizona Earn to Learn, which partners with three state universities in Arizona to offer qualifying low-income students the opportunity to save $500 of earned income with $2,000 of federal matching funds and $2,000 of scholarship funds, for a total of $4,500 toward education expenses each school year.

Coordinating with community organizations to leverage AFI and other funding streams is just one idea for tackling the rising cost of higher education. If we are going to achieve President Obama’s goal of making college affordable for every American, we need to carefully consider how we can best utilize our resources and bring proven solutions to scale.

What other innovations have you observed that may help to curb college costs? Share your ideas in the comments!

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Could the "Money Pool" Model Help Low-Income Families Reach Their Savings Goals?

By Luis Cervera, Guest Contributor on 09/08/2015 @ 05:00 PM

Tags: Innovation, Individual Development Accounts, Financial Capability

Since the late 1990’s, Individual Development Accounts (IDAs) have been linked to programs that have been offered by agencies across the country to help low-income families reach savings goals. And although the model is sound, participant completion rates have notoriously been low.

It has been speculated that the reason for these low completion rates are threefold: the lack of structure and accountability placed on the participant, easy access to saved funds and the protracted completion date, which is often several years after the participant enters the program.

March 2015 - Local First Arizona Business Accelerator Graduates & Staff

Most IDA participants must take part in an extended program—some as long as five years—during which expectations can be set very low and, above all, the finish line appears light years away. The result is that the participants’ motivation wanes over time, while unexpected expenses appear, making the partially-saved funds an easy target for early withdrawal.

With eMoneyPool’s community finance tool, a technologically-updated version of a traditional money pool (you might know them as a Tanda, Cundina or Susu), we have been able to remove the challenges of traditional IDA programs, resulting in a 99% program completion rate.

The best part is that the tool is free for agency partners from all sectors, including nonprofits. They are not required to register and can use eMoneyPool easily and effectively. Most importantly, it’s scalable, so anyone offering IDAs across the country can tap into this tool with little to no training and reap the benefits of a 99% completion rate.

First, a quick review of how a traditional money pool works. A group of 10 people agree to contribute a fixed amount of money (say $100) on a fixed interval (say monthly). Every time the group pools the money together, one member of the group receives those funds to spend on anything they need. The next month, the same 10 people again make their contribution and the $1,000 is taken by the next member in the circle. This continues until everyone in the group has received their lump sum of money.

By design, eMoneyPool’s model creates a short-term, structured plan, which locks participants into the dates of their expected savings contributions. Also, by nature of working in a group of people who are all depending upon each participant’s monthly contribution, a high level of accountability, or “social pressure,” is placed upon the participant to make payments on time. Finally, there is no access to the funds until the specified payout date, which removes the issue of participants “dipping” into saved funds.

To prove the validity of the concept, eMoneyPool partnered with a local non-profit, Local First Arizona, which offers an IDA program to aspiring small business owners, known as the Business Accelerator Program. The participants must take part in a six-month program, which includes a curriculum covering topics such as Creating a Business Plan, Marketing and Tax Preparation.

Since 2013, the program has also required that participants join a money pool in order to meet their IDA savings goal and qualify for their one-to-one savings match. This specific accelerator program requires the participants make bi-monthly payments over five months, but the money pool platform can be offered in a variety of options, such as monthly payments of about $50.

As of this writing, five classes, or 60 individuals, have participated in the program and despite some of the participant’s concerns about their ability to successfully manage the payment schedule, have demonstrated a 99% completion rate.

As one of our participants, barber Benjamin Carrillo said, “At first I was concerned about being able to make my payments on time, but I knew the group was counting on me. I was able to make adjustments to my expenses and it was easy to save. I’m going to do it again.”

By applying technology to an age old practice, used all over the world due to its ability to create a mix of forced discipline and peer pressure, we stumbled upon one potential solution to the IDA puzzle.

For more information or questions, contact Luis Cervera at luis@emoneypool.com.

Luis Cervera is President and Co-Founder of eMoneyPool, an online community finance tool based on the lending circle or ROSCA. eMoneyPool has perfected the traditional model known around the world by applying technology in order to make it easier, safer and more efficient while guaranteeing the entire process. The eMoneyPool platform helps individuals reach their short-term financial goals while building a positive payment history which is accepted by its lender partners.

Attention IDA Practitioners: Today is the Last Day to Take Our 2015 IDA Program Survey!

By Sarah Gray, Graduate Intern on 08/11/2015 @ 10:00 AM

Tags: Individual Development Accounts

Individual Development Accounts (IDAs) encourage low- and moderate-income individuals to save what they can for a higher education, home, small business, car, technology or rainy day fund. These funds provide savers with opportunities for a better quality of life and the financial security to weather hard storms, like unexpected car repairs or unemployment.

It is with these individuals in mind that IDA practitioners work hard in their communities to provide fruitful opportunities—and these opportunities are clear. In the 2013 IDA Program Survey administered by CFED, roughly 37% of IDA programs that allow for higher education savings have reported an increase in accountholders saving for a higher education. Additional research points to the fact that Individual Development Accountholders were two to three times less likely to lose the home they bought through an account to foreclosure in comparison to their non-accountholding low-income counterparts. The takeaway: these accounts produce results.

That is why we need your participation in the 2015 IDA Program Survey. If you currently work on an IDA program, sharing your voice will help to build valuable research that can inform policy and services provided to these programs. Your participation is not simply used to create data, but to lift up IDA programs centered on strengthening the financial well-being of families across the nation. It is because of your work that over 100,000 IDAs have been opened in the United States, to date.

Please complete the 2015 IDA Program Survey TODAY, and feel free to send the link to other IDA programs as well. In appreciation of your time, everyone who participates in the survey will also be entered to win an Amazon gift card. It is only with your help that we can inform national and local policy on the issues that these programs face and produce much-needed assistance.

Thank you for your relentless efforts. Let’s encourage everyone to continue to support this work in the future!

Building Assets for People with Disabilities

By René Bryce-Laporte, Susan Tachau and Joe Wykowski on 06/10/2015 @ 01:00 PM

Tags: Individual Development Accounts

In the early days of the asset-building movement, we sought to test the simple theory that low-income people could and would save if provided the means, incentive and structure to do so. Projects like the American Dream Demonstration (ADD), the Savings for Education, Entrepreneurship and Downpayment Initiative (SEED) and the Assets for Independence Program (AFI) have helped establish that simple truth. A new, more empowering way of helping low-income Americans was born.

But in establishing that baseline, in hindsight, we did not address the needs of all groups as effectively as we might have. One such group is people with disabilities. There are more people living with disabilities than you might think. One in five Americans has a disability, and one in 10 has a significant disability. Those are big numbers. People with disabilities are less than one-third as likely to be employed as people without disabilities. Worse, people with disabilities are twice as likely to live in poverty. People with disabilities have a hard time making ends meet each month, and despite the fact that they face a particularly complex set of rules to acquire and maintain public benefits and support, they even have less access to financial education.

Given the needs of many people with disabilities and the promise of the asset-building movement, it is not surprising that some practitioners have been drawn to the concept of Individual Development Accounts (IDAs). IDAs have the potential to be a particular help to people with disabilities who would like to use the accounts to acquire assistive technology which in many cases might make them more employable. But AFI, the greatest source of IDA funds, presents a couple of structural challenges. Specifically, AFI does not permit the use of unearned income as the participant contribution, and AFI does not include assistive technology as a permissible asset goal.

If the goal of IDAs is to help accountholders achieve financial security, helping accountholders become more employable is a desirable outcome. There are a few local jurisdictions where local money enables practitioners to match accountholder contributions of unearned income en route to acquisition of assistive technology. For example, Community Vision, Inc. (CVI) in Oregon and the Pennsylvania Assistive Technology Foundation (PATF) in Pennsylvania enroll participants for this purpose. They not only provide financial education and IDAs, but also life skills training that help prepare program participants for independence.

Currently seven savers are enrolled in CVI’s Future IDA program for the express purpose of acquiring assistive technology. In addition, five individuals have successfully completed loan applications for assistive technology or adapted equipment via CVI’s Oregon Accessibility Loan Program. In the last three years the requests for IDA accounts have quadrupled as individuals experiencing a disability and their families become aware of IDAs as a viable tool to save. In fact, Community Vision estimates they could currently easily enroll 50 individuals a year into IDA accounts if federal dollars to help create a larger match pool for savers became available. Similarly, PATF recently completed a pilot program—the Money Club—for 17 young adults who have disabilities. The program incorporated financial education with the establishment of an IDA account – the savings from which were used to purchase assistive technology. Several of the members purchased devices that have enabled them to get jobs.

As word has spread about the success of the Money Club, others have asked to join. This fall, PATF will begin working with 12 transition-age students who attend Overbrook School for the Blind in Philadelphia. Each student receives SSI, none has a bank account and all are interested in living independently after high school. One can easily see the need for programs like the Money Club in the disability community and the potential for asset building to help a large constituency gain financial independence.

In order to better address the needs of people with disabilities, we offer two recommendations. First, when AFI is eventually re-authorized, particular attention should be given to the needs and goals of people with disabilities, who are potentially large beneficiary group. In addition, more states should incorporate the needs and goals of people with disabilities in their state IDA programs.

People with disabilities are ready to build assets too.

René Bryce-Laporte is Principal at Bryce-Laporte Information & Consulting. Susan Tachau is Executive Director of Pennsylvania Assistive Technology Foundation. Joe Wykowski is Executive Director of Community Vision, Inc.

What We Learned from the Savings Innovation Learning Cluster, Part III

By Carla James, Guest Contributor and Dean Johns, Guest Contributor on 04/08/2015 @ 03:30 PM

Tags: Financial Capability, Individual Development Accounts, Matched Savings

This blog is the second in a three-part series from the Savings Innovation Learning Cluster (SILC) supported by CFED and MetLife Foundation. The series details the activities that SILC organizations have undertaken to develop innovative savings strategies for their clients. In this post, Carla James and Dean Johns of the John H. Boner Community Center, a multi-service organization working to improve quality of life in the Near Eastside neighborhood of Indianapolis, share some of their takeaways from their SILC journey so far.

The John H. Boner Community Center (JHBCC) operates an Individual Development Account program in which participants save towards buying their first home, starting a business, or attending college or job training. Participants earn a $3 match for every $1 they save, while completing financial education, one-on-one financial coaching and training specific to their goal. We began the SILC process believing that we would create an emergency savings innovation targeted towards our existing IDA participants. Through SILC, we conducted many activities to continually refine our ideas, coming closer to what our clients truly needed with each iteration. In the end, we refined and launched a pilot that looks quite different from what we originally envisioned.

Early on in SILC, we conducted a series of one-on-one interviews to learn more about our clients’ experiences around savings and emergencies. While we expected emergency savings to be an issue for our clients, the scope of the problem surprised us: IDA participants, focused on the big goal, were not setting money aside for unexpected expenses and emergencies. Often, the IDA was their only savings, which meant that any unexpected expense could derail them to the point that they would delay their asset purchase or leave the IDA program. Also, when participants did have money available to take care of unexpected expenses, they felt badly, or like a failure, for having to use the money. Their views on what constituted an emergency also differed greatly from our expectations: they often viewed what we considered flexible expenses, such as needing gas for their cars, as emergencies.

In our Client Journey Mapping exercise, we detailed every step that a client would take in our IDA program, from learning about the program to buying an asset. This exercise revealed critical information about our IDA program. We found that while clients were coming to JHBCC ready to save, they were waiting an average of six months to complete the enrollment process and open an account because of the program’s waiting list. This gap presented a good opportunity to engage these clients in other services while they waited.

After many rounds of interviews, mapping exercises and internal discussions, we came to our final idea. In order to both address the need for emergency savings and the lengthy waiting period to open an IDA account, we ultimately decided to pair an emergency savings account with prize-linked incentives. This innovation is being offered to participants in our financial education class for interested IDA applicants. This service will allow future IDA participants to develop emergency savings to better weather financial hardships. They will also hopefully be better positioned for success in the IDA program.

All of these features were designed because we wanted to meet clients where they were, and make it as easy as possible for them to start saving. Through SILC, we were able to identify points of opportunity and really think through our existing procedures. The entire process used to identify the problem, evaluate, structure and revise solutions was quite valuable and we intend to replicate it to evaluate other programming that we offer.

Marvin Talley: Proof that Asset Building Can Change Lives

By Paul Day on 10/13/2014 @ 12:30 PM

Tags: Financial Capability, Housing and Homeownership, Individual Development Accounts

After going through a rough divorce, Marvin Talley lost everything—his stable, salaried job with the federal government; his passion for tennis playing and his overall stability. Marvin struggled with drug addiction, joblessness and debt for over a decade. Through a transitional shelter, he was able to rebuild his life and find a job working for a nonprofit. Eventually, Marvin would get engaged to his friend, Deborah, who encouraged him to think about their future.

“I had to acknowledge to myself the role that I played in allowing my debt to happen. Rebuilding equity back in the District was not easy!” - Marvin Talley

Deborah introduced Marvin to the homeownership classes at Manna, where he learned about Capital Area Asset Builders’ (CAAB) IDA Program. Through CAAB’s IDA program, Marvin could save for a downpayment on a mortgage. “It was a win-win situation,” Marvin says.

At the same time, Marvin and Deborah were undergoing significant medical issues: he had prostate cancer and she had triple bypass surgery that left her unable to work. Because he was the sole income earner, Marvin decided to take on the mortgage entirely himself.

It was “touch and go” for a while before Deborah was able to go back to work. Marvin struggled with paying down his credit cards while contributing to the IDA. With help from CAAB, Marvin was able to access his credit report so he could start addressing some of these issues. Along the way, he also learned how to stick to a budget.

All of Marvin’s contributions to his IDA were matched threefold, and he eventually saved enough to make a downpayment on a home in the Trinidad neighborhood of Washington, DC. In August 2006, Marvin and his wife were able to move into their new home.

“We were able to celebrate my wife’s birthday, [and] Thanksgiving and Christmas in our new home, and that really made us feel good to be able to see our hard work come to fruition because of CAAB.” - Marvin

This September, Marvin has been in his home for eight years. Unfortunately, Deborah has since passed away, but he credits her to introducing him to CAAB, which totally changed his life.

“We were able to manage our money where we were able to pay for things with cash. That meant a lot of me. That took a lot of burden off of us. I was able to maintain the daily expenses. That gives you a sense of empowerment over yourself.” - Marvin

Marvin looks forward to further building his financial future. CAAB is now offering investment and estate planning classes, which he plans to take advantage of. His story is an incredible testament to the power of asset building in changing lives and providing those lifelong pathways to prosperity for all Americans.

To learn more about CAAB’s programs, visit their website.

IDA Programs Empower the Homeless to Afford Homes

By Ken Brown on 08/26/2014 @ 10:00 AM

Tags: Individual Development Accounts

This guest blog post was originally published on August 15, 2014 in City Limits. We thank Ken Brown and City Limits for this insightful editorial.

Individual Development Accounts are tools used to accelerate the savings of low-income individuals. Typically they are used for the initial capitalization for a small business, a down payment on a home and post-secondary/vocational education.

Through the tool of matched deposits, clients contribute a contracted amount into a depository institution (i.e.: bank) for a specified length of time. At the termination of the contracted period or when the agreed-to maximum match amount has been reached, the monies are withdrawn using a two-party check. These monies can then be used exclusively for the purpose of moving from shelter to housing in the community. Further, financial literacy classes are a requisite component of the program. Case managers can also make referrals to credit counseling and other pertinent resources. The expectation is that these IDAs are used to help those individuals currently residing in shelters to exit more expeditiously to permanent housing.

RSS IDAs are also politically appealing. This is not a simple hand-out. Participants have to contribute a portion of their money to the account. The match is then provided contingent upon their contribution. This is in line with the "help those who help themselves" ethic. An IDA is also one of the few tools that transfers wealth to low-income people. As banks and depository institutions are an integral part of this program, this is an opportunity for the financial industry to do good for those with less.

The spirit of Franklin Roosevelt’s second inaugural address informs this project. As he was inaugurated for his second term he said, "By using the new materials of social justice we have undertaken to erect on the old foundations a more enduring structure for the better use of future generations."

IDAs not only help the poor to accumulate assets and thereby enable them to make purchases that increase their potential for further ascendance in the economy, but also inculcate beneficial skills and habits. These benefits from IDAs have been known since their beginnings in this country.

Michael Sherraden, arguably the father of the American IDA industry, said in testimony before the President’s Commission on Social Security in 2001, "IDA participants are willing to make consumption sacrifices in order to save….Effects of saving and asset accumulation appear to be multiple and positive in areas such as work behavior, home ownership, confidence and control, and plans for education."

There is, at present, no IDA program operating that helps homeless people leave shelters. If IDAs can be used for the sorts of purchases as listed above, why could they not be used to help those in shelters attain independent housing?

The attempt to wed IDAs to shelters was successfully done in Toronto, Canada. A pilot program was run in Ontario, Canada from 2006 to 2009. If Toronto was able to implement an IDA program for shelter participants, then why should not New York City do likewise? New York would be an excellent place to start such an initiative, considering the great resources here in academia, social science research organizations, media and philanthropy. This concentration of resources bodes well for the popularization and replication of such a program when it is successful. In addition, New York City is the founding member of the Cities for Financial Empowerment Fund, whose mission it is to embrace financial empowerment strategies and replicate successful models that can improve the financial well-being of individuals and families.

In Toronto, Independent Living Accounts were used in shelters. The match rate varied from $1:$2 to $1:$3. Of the sample of 129 participants, 78 percent completed the six-month minimum savings period, and 44 percent met or exceeded the maximum matched amount of $400 per person. Clients deposited a total of $33,139. The total match monies added was $78.937. Thus over a period of 8 months (the maximum time surveyed), a total of $112,076 was accumulated and available for clients. This averages to $1,149.95 per successful participant.

By replicating and modifying the experiences of IDA programs elsewhere, an IDA program can be created in New York City to similarly help move residents from shelters into housing in the community. Not only will it reduce the city's large shelter population, it will foster financial literacy and sound saving habits among a population that's been given little other opportunity to learn or develop them.

Now is an opportune time to launch such a program. In Washington, D.C., CFED will next month host the Assets Learning Conference, among the roundtable plenaries will be, IDAs in Shelters. This affords an opportunity to announce to the nation (and there are typically participants from all over the word), that New York City is, again taking the lead in assisting the poor in moving away from deprivation and towards the Middle Class.

Oregon IDA Initiative Expands Administrative Capacity

By Fran Rosebush Baylor, Jessica Junke and Amy Shir on 08/21/2014 @ 02:30 PM

Tags: Assets & Opportunity Initiative, Individual Development Accounts, Matched Savings

With $10 million in revenue each year and having opened over 3,000 Individual Development Accounts (IDAs), the Oregon IDA Initiative is one of the largest statewide asset-building networks in the country. Yet, while the program has enjoyed success after success, it had concerns about its long-term sustainability and continued scalability due to inefficiencies in systems that were straining programmatic resources of their local IDA network partners.

Realizing that improvements in these systems would be essential to helping more Oregonians build savings and wealth, the Oregon IDA Initiative, an Assets & Opportunity Network Lead State Organization, sought assistance through the Asset & Opportunity Network Technical Assistance Fund. With assistance, they hoped to identify and improve inefficiencies in two systems: data transfer between financial institutions and local partners and match disbursal processes.

Seeking Efficiencies in Data Transfer Systems

Currently, the Oregon IDA network has 23 financial institution partners. Only a handful of them provide automatic Electronic Data Transfers of account information, meaning transaction data must be manually entered by local IDA providers each month, costing time and programmatic resources.

Although many programs use a manual process for getting data into Outcome Tracker, such a process is unsustainable for the Oregon IDA Initiative given their growth. Thus, the Initiative sought to tackle this problem by working with financial institution partners to identify why financial institutions did not transfer data electronically.

In the process, Initiative staff learned that financial institutions are able to provide these data, but that doing so raises concerns about data security. Therefore, building relationships between financial institutions and the Initiative would be essential. In order to ensure that banks and credit unions are willing to provide data electronically, community organizations responsible for administering IDAs must prove themselves as trusted custodians of transaction data.

A key lesson from this project comes from the Oregon IDA Initiative’s realization that in order to achieve the scale they are seeking, it is in their interest to focus on relationships with financial institutions that are willing to share account information through Electronic Data Transfer. Also, the geographic distribution of physical branches across Oregon can be sparse beyond metro area, and limiting the financial institution partners could be a concern for their rural IDA participants. Luckily, ATM coverage is widespread and most necessary participant savings account transactions could occur at ATM branches.

“We all value the positive, empowering, and hopefully easy relationships and contacts our participants have with financial institutions. For most of our history this has been transacted in person, face-to-face. We recognize that this mode of interaction may remain vital for some of our participants. At the same time, virtual relationships with financial institutions are becoming standard. This is where we have learned that the Oregon IDA Initiative could gain efficiencies and save resources: relying more heavily on the financial institutions who are willing to provide electronic data and who support virtual relationships with fewer geographic limitations.”

–Oregon IDA Initiative report to local partners

Seeking Efficiencies for Match Disbursal Processes

Another challenge facing the Initiative was the rigidity with which they had to disburse Assets for Independence (AFI) funds into the accounts. With help from the TA Fund, the Oregon IDA Initiative worked with AFI to make the IDA fund disbursement process more flexible and efficient. A lesson gleamed here is that IDA providers can reach out to AFI to discuss possible flexibilities in the match disbursal process—there may be more options available to you.

While these inquiries alone increased the Initiative’s bandwidth to offer IDAs to low- and moderate-income Oregon families, Initiative staff learned in the process that AFI permits lump-sum deposits into IDAs designated for microenterprise development, which is not a feature of accounts designated for other asset purchases. This means that such deposits can be used to capitalize a business, expanding the accountholders’ ability to build wealth in the long-term.

Oregon IDA Initiative continues to seek ways to increase efficiencies of their network by piloting relationships with online financial institutions. CASA of Oregon has launched a pilot with One Pacific Coast Bank, an online financial institution which already hosts IDA saver accounts in California and Washington. One Pacific Coast Bank has an appetite for IDA accounts, so as part of the pilot, CASA hopes to combine participant savings with match funds, disbursing both in one payment to vendors where possible. Although this approach has not yet been tested, the fact that One Pacific Coast Bank is willing to tackle this efficiency leaves us hopeful. What CASA learns from this pilot might guide us in asking other institutions to innovate.

Additional research into ways that networks are seeking efficiencies to support scale is being done by other IDA networks with Outcomes Tracker to create a client portal in their database where clients can access their account information, complete forms and receive automatic reminders to save. This is an example of how leveraging technology tools can allow programs to provide a hybrid of both in-person and virtual interactions with clients to support their goals of increasing their scale.

Insights like these do much to inform the work of staff members at IDA programs throughout the country. This is what makes the JPMorganChase Technical Assistance Fund unique. Beyond simply providing direct TA to organizations facing challenges in their asset-building programs, the TA Fund goes one step further to help extend the lessons gleaned from the delivery of the TA to other organizations in the field. Asset-building organizations that are selected for the JPMorganChase TA Fund can extend what they learn to other organizations, broadening and deepening the knowledge base to the benefit of all of us.

In the coming months, CFED will report on the lessons of the other organizations that have participated in the Technical Assistance Fund. We extend our gratitude to JPMorganChase for supporting the Fund and we look forward to working with them and the selected organizations to curate insights that improve programmatic outcomes.

The Oregon IDA Initiative is led by Neighborhood Partnerships, a Portland-based nonprofit dedicated to creating opportunity for people with low incomes. To learn more about the Oregon IDA Initiative, click here.

Bank of the West: Expanding Homeownership Opportunities

By Chris Bernal on 08/19/2014 @ 05:00 PM

Tags: Housing and Homeownership, Individual Development Accounts

In April, CFED, in partnership with Bank of the West, solicited applications from Individual Development Account (IDA) programs to support homeownership initiatives in key Bank of the West markets in California and Arizona, particularly those serving ethnically diverse individuals and families. Nine outstanding programs were chosen based on specific selection criteria outlined in the initial RFP and each received a $12,450 grant to support their initiatives.

We are excited to introduce these organizations and congratulate them on their excellent work:

  • Alliance for African Assistance (AAA): Alliance for African Assistance aims to address the needs of San Diego’s growing refugee population. Through its IDA program, it provides financial literacy assistance, case management, IDA account management, Home Management Education and Credit Counseling. AAA’s current homeownership IDA program, started in 2010, includes homeownership education classes and counseling.
  • California Coalition for Rural Housing (CCRH): CCRH supports the production and preservation of decent, safe, and low-cost housing for rural and low-income Californians. Starting in 2006, CCRH has offered multiple IDA programs designed for diverse homeownership models, such as first-time homebuyers, families living in foreclosed homes and self-help housing.
  • Community Housing Development Corporation (CHDC): CHDC strives to improve housing opportunities for current and future residents of Contra Coast County, California.  CHDC’s IDA Program, started in 2004, is currently coupled with extensive financial fitness education classes, one-on-one counseling sessions and first time homebuyer financial education workshops.
  • International Rescue Committee (IRC) of Tucson, Arizona: The IRC provides opportunities for refugees to thrive in America by offering a full range of services and assistance, including assistance towards homeownership for refugees to attain self-sufficiency in their new home. IRC has offered a homeownership IDA track since 2001, and currently offers workshops and classes to complement its savings account program.
  • New Economics for Women (NEW): Founded in 1985 as the first Latina-operated nonprofit community economic development organization in the United States, NEW is dedicated to the economic security of women, especially immigrant women, in low-wealth communities throughout the greater Los Angeles area. NEW started its homeownership IDA program in 2004 and has served mono-lingual Spanish-speaking families overcome barriers to homeownership.
  • Newtown Community Development Corporation: Newtown has a mission to increase the supply of permanently affordable housing while developing and supporting homebuyers through innovative programs and partnerships in Arizona. Newtown started offering IDAs for homeownership in 2001 and currently offers classes, training and workshops alongside its homeownership savings accounts.
  • RISE (Reach. Invest. Succeed. Earn.) Financial Pathways: RISE, formerly Community Financial Resource Center (CFRC) is a Community Development Financial Institution offering comprehensive and innovative ways to build wealth for historically underserved residents in South Los Angeles and across L.A. County. RISE has a long history administering and providing IDA programs, starting in 2003, and currently offers a comprehensive plan to support homeownership. Alongside the savings account, RISE offers homebuyer counseling, credit repair assistance and multiple workshops and trainings.
  • Self Help Enterprises (SHE): Founded in 1965, Self Help Enterprises is dedicated to self-help housing, sewer and water development, housing rehabilitation, multifamily housing and homebuyer programs in the San Joaquin Valley of California. Starting in 2009, SHE has offered an IDA program designed for first-time homebuyers in their seven county service areas.
  • Women's Achievement Network and Development Alliance (WANDA): WANDA is a privately funded nonprofit that is successfully increasing the economic self-sufficiency of low-income, single mothers in the San Francisco Bay area. Since 2008, WANDA provides an IDA program with extensive workshops on personal and professional development along with networking and coaching opportunities provided by donor volunteers after a period of financial literacy training.

We look forward to hearing more about how they are supporting their IDA participants in becoming homebuyers in the coming months!

CFED would like to thank Bank of the West for sponsoring this opportunity and for its continued support of IDA programs across the country.

Assets for Independence and Subsidized Housing: Partners with A Common Goal

By Marquan Jackson, Guest Contributor and Russ Olwell, Guest Contributor on 07/01/2014 @ 12:30 PM

Tags: Housing and Homeownership, Individual Development Accounts, Matched Savings

Assets for Independence programs are a powerful tool to encourage earnings, savings and self-sufficiency among asset-poor families. However, resources are limited for these programs, and much time and funding can be spent recruiting and maintaining contact with potential participants.

While AFI and other asset-building programs are expanding across the nation, the world of subsidized housing is in the middle of a radical shift, promising to make residents more economically self-sufficient. Through the Rental Assistance Demonstration (RAD) program, many traditional Public Housing Authorities are changing from landlords to managers of project-based section 8 complexes. In the next few years, 60,000 units of public housing will be completely rebuilt or renovated by the U.S. Department of Housing and Urban Development. These complexes will no longer be traditional public housing units, but managed by private companies, overseen by the housing commissions. The aim of the program is to renovate this housing into attractive, but temporary, housing for families in need of assistance.

So while AFI programs are often in search of potential participants, public housing authorities nationwide are in search of tools to help their residents make a transition from public assistance to work, and from subsidized housing to owning their own home.

This makes the partnership of subsidized housing and AFI programs particularly timely. Residents in subsidized housing are already at the income levels required by AFI eligibility, are often housed in a compact area, and are ready to take advantage of the opportunities that asset building programs offer in terms of home ownership, higher education and small business development.

At the Hamilton Crossing Family Empowerment program, we received an AFI grant this spring, with the goal of enrolling 34 families at our complex into an asset- building program. We partnered with local businesses, nonprofits and government to develop both the educational components needed, as well as to raise the local match required. At our program, 57% of our residents put saving for a house at the top of what they want to learn more about.

However, the task of recruiting and qualifying participants has been simplified by our status as a project based section 8 program, and the proximity of residents to a community room and computer lab on site promises to make recruitment and training much more manageable for a program our size.

We hope to expand this partnership to include other Ypsilanti Housing Commission properties in the next year, as these units have an even lower income that our own residents. This will help encourage residents to pursue earning more income, to further their education, and to think about the possibilities of homeownership or starting a small business.

As the YHC enters the RAD program this year, AFI offers real rewards to earned income, and encourages participants to become more self-sufficient through raising their own income and investing in the savings program.

Marquan Jackson is Director of the Family Empowerment Program at Hamilton Crossing, Ypsilanti, Michigan. Russ Olwell is Director of the Institute for the Study of Children, Families and Communities, Eastern Michigan University. Their work at Hamilton Crossing is funded by the Kresge Foundation.

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New Funding Opportunity for IDA Programs in California & Arizona

By Dominique Derbigny on 03/13/2014 @ 02:00 PM

Tags: Individual Development Accounts, Matched Savings

CFED & Bank of the West Announce New Funding Opportunity for
IDA Programs in California and Arizona

Submit your proposal today to be eligible for a $12,000+ grant!

CFED, in partnership with Bank of the West, is soliciting applications from IDA programs to support homeownership initiatives in key Bank of the West markets in California and Arizona, particularly those serving ethnically diverse individuals and families. A total of nine programs will be selected, and each will receive a $12,450 grant.

Specifically, we're looking for programs who could use grant money to fund:

  • Participant matching dollars for IDA participants purchasing homes.
  • Homeownership education classes for IDA participants.
  • Case management for IDA participants.
Submit a Proposal Today!

To submit an entry, please download and review the Request for Proposals. Then, when you're ready to submit your program's proposal, click here. Please note that once you've started filling out the online form, you won't be able to save and revisit your entries, nor will you be able to see your entry once it has been submitted. Therefore, we recommend that you compile your responses to questionnaire items in a separate document and then copy and paste them into the online form.

DEADLINE: April 4, 2014

This opportunity expires on April 4, 2014, and all submissions must be received by this date. Priority will be given to programs serving ethnically diverse communities in the Bank of the West footprint in California and Arizona. For specific eligibility requirements, download the Request for Proposals. Questions? Contact Dominique Derbigny.

CFED would like to thank Bank of the West for sponsoring the this opportunity and for their continued support of IDA programs across the country.

CFED Selects Six Organizations for New Savings Innovation Learning Cluster

By Parker Cohen and Evelyn Stark, Guest Contributor on 03/03/2014 @ 09:45 AM

Tags: Financial Capability, Individual Development Accounts, Matched Savings

Late last year, CFED announced an exciting new venture in partnership with the MetLife Foundation, the Savings Innovation Learning Cluster (SILC). SILC will seek to foster the development and testing of innovative products and strategies that facilitate savings by low- and moderate-income (LMI) individuals and families. Through a learning cluster model, we will work with six organizations to develop, implement and evaluate their savings innovations and identify promising ideas that can then be further refined, replicated and brought to scale.

MetLife Foundation, like CFED, believes that affordable, accessible and well-designed financial services can transform the lives of those in need. The Foundation has committed $200 million over the next five years to advancing financial inclusion around the world, and this partnership is an important step forward in meeting that goal.

While many types of strategies have arisen over the past twenty years to facilitate savings among low- and moderate-income individuals and families, such as Individual Development Accounts (IDAs) and Bank On initiatives, SILC will seek to learn from new innovations to these savings programs and from emerging savings ideas. The idea for SILC developed from the need to have a greater understanding of these savings innovations and their potential for replication and scale. While some of these savings innovations have garnered a fairly extensive reach, we know very little about the mechanics of how these strategies encourage savings (i.e., what aspects of the program facilitate saving and what might unintentionally create barriers to saving) as well as their relative effectiveness. The MetLife SILC project will shed much-needed light on these questions. The evaluations of the SILC innovations can be used to identify the most promising savings mobilization strategies and products that can be brought to scale.

In December 2013, we issued a request for proposals and received an overwhelming number of outstanding applications from organizations interested in joining SILC—114 in total! While difficult to whittle down, we ultimately, we selected six organizations to participate:

CFED’s Learning Cluster model is designed to create new connections and collaborations between organizations working to overcome similar challenges. For SILC, the selected organizations are implementing and evaluating savings innovations targeted at low- and moderate-income populations in various venues, including Individual Development Account (IDAs), energy assistance, consumer loan and employer-based savings programs. SILC members will work with their peers to share expertise, diagnose and solve problems and learn from each other’s experiences to implement and refine their savings innovations.

In addition to this peer learning, SILC members will receive targeted technical assistance from CFED to design and test their savings innovations. CFED will keep you updated on the Learning Cluster’s progress as its members work their way through these new endeavors, with a keen eye on how their learning can help to inform your own organizations’ approaches to helping low- and moderate-income families save. The MetLife SILC project will kick off with an in-person convening in late March, so stay tuned for updates!

Help Families Escape Financial Insecurity: Reauthorize Assets for Independence

By Ezra Levin on 02/06/2014 @ 10:00 AM

Tags: Federal Policy, Individual Development Accounts, Matched Savings

Back in 2007, I was an AmeriCorps VISTA in California tasked with identifying gaps in homeless services in Santa Clara County. I was particularly struck by one innovative program run out of a local Catholic Charities. They called it an “Individual Development Account,” or “IDA” for short. The program combined financial education with a restricted matched savings account that low-income families could use to save for a first home, to pay for college or to start a business. Families save a dollar, and then they get a dollar matched for one of those big investments. A college degree, a home of their own, an entrepreneurial venture—the families were saving for their piece of the American Dream. What a deal!

What I didn’t know then was that the single largest source of funding for these innovative IDA programs was and remains the federal Assets for Independence (AFI) program. While the total size of federal funding is small—less than $20 million for the entire country this year—its impact is enormous. Since I first encountered IDAs in 2007, the number of AFI-supported savings accounts has roughly doubled to 100,000. These accounts represent real hope for thousands of families who are trying to save and invest their way to financial security.

Given AFI’s modest cost and big impact it’s disappointing that Congress hasn’t reauthorized the program since enactment in 1998. AFI was a bipartisan proposal, with Republican Senator Dan Coats (R-IN) as the lead sponsor. Its bipartisan appeal makes sense—AFI helps families save their own earned income so they can escape poverty and reduce their reliance on public benefits. And yet while Rep. John Lewis (D-GA) and Sen. Jeff Merkley (D-OR) are advocating for the program, today’s Congress lacks a partnering conservative champion for reauthorization.

AFI reauthorization really is needed in order to make some common-sense reforms. Take for instance the tragic flaw in the program for domestic violence victims: AFI only allows first-time homebuyers to save for a home. As a result, a victim of domestic violence who is attempting to escape an abusive situation can be prevented from saving for a new, safe home. Fixing this and other obvious flaws should not be a partisan issue.

Our new Federal Policy Brief provides an overview of IDAs and the AFI program. It also highlights a few specific changes that will make the program run better so that AFI can continue to help hard-working Americans pursue the American Dream. We hope this brief will help members on both sides of the aisle come together to make these positive changes soon.

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